IPO targeted through Foxtel, Fox Sports merger

Telecommunications firm Telstra and media group News Corp have announced their intention to merge Australian pay-television operator Foxtel and pay-television broadcaster Fox Sports into a new company, with a view to launching an initial public offering.

Reports of such a move had emerged in the Australian press in March 2016, and Telstra and News Corp have confirmed the plans in a bid to create an entity that is better positioned to deliver premium sports as well as homegrown, original and international entertainment in what they described as a “rapidly evolving and competitive” marketplace.

Subject to the conclusion of definitive agreements, regulatory review and satisfaction of certain other conditions, News Corp will have 65 per cent shareholding in the new company and Telstra will have 35 per cent. News Corp currently owns 100 per cent of Fox Sports, while Telstra has 80 per cent of the equity in Foxtel but acts as a 50 per cent owner. 

News Corp will appoint the chairman, majority of the new company’s board and senior executives and Telstra will appoint the remaining directors. 

Financial terms of the proposed agreement were not disclosed. The two parties said the proposed arrangements will better position the new company for an IPO in the future, with News Corp having a majority stake.

Telstra chief executive Andy Penn said: “Under this arrangement Telstra will continue to support the company with our broadcast reseller arrangements which is a major strategic component for us.

“More people are watching more media on more devices for more hours every day of the week, so the demand for media and for content is only going to grow. With a strong premium content proposition and scale subscriber base, the new company will be well positioned to deliver a compelling customer experience.”

News Corp chief executive Robert Thomson added: “The new structure will simplify management control and ensure that the company is best placed to leverage the skills of its talented Australian employees and programme makers.

“There is no doubt that the world of content is becoming more complicated and competitive, and it is important that Australia has a strong local platform for its great sports and for homegrown creativity, as well as a showcase for international programmes.”

Telstra and News Corp said they will work to finalise the transaction, including obtaining regulatory approval, with a goal of completion in the first half of 2018.